CMC Markets releases H1 2021 results

Record H1 trading performance, with significant investment in technology to drive further growth

For the half year ended  30 September 2020 30 September 2019  Change 
Net operating income (£ million) 230.9 102.3 126%
CFD and spread bet net trading revenue (£ million) 200.4 85.1 135%
Stockbroking net trading revenue (£ million) 26.3 14.5 82%
Other income (£ million) 4.2 2.7 53%
Profit before tax (£ million) 141.1 30.1 369%
Basic earnings per share (pence) 38.3 9.5 303%
Dividend per share (pence) 9.20 2.85 223%
CFD gross client income (£ million) 173.6 103.5 68%
CFD client income retention 115% 82% 33%
CFD active clients (numbers) 59,082 41,603 42%
CFD revenue per active client (£) 3,392 2,047 66%

Notes:
Net operating income represents total revenue net of introducing partner commissions and levies
CFD net trading revenue represents CFD and spread bet gross client income net of rebates, levies and risk management gains or losses
CFD gross client income represents spreads, financing and commissions charged to clients (client transaction costs)
CFD active clients represent those individual clients who have traded with or held a CFD or spread bet position with CMC Markets on at least one occasion during the six-month period
CFD revenue per active client represents total trading revenue from CFD and spread bet active clients after deducting rebates and levies

Key highlights

  • Record H1 trading performance, with net operating income up £128.6 million (126%) to £230.9 million (H1 2020: £102.3 million)
  • CFD gross client income up 68%, representing increased client trading and demand from new and existing clients
  • CFD revenue per active client up 66% to £3,392, with an unwavering strategic focus on high quality clients
  • CFD active clients increased by 17,479 to 59,082 (42%), demonstrating the continuing attractiveness of the platform to existing and new clients, with encouraging early signs around new client quality and longevity
  • Stockbroking net trading revenue up 82% driven by significantly increased client trading as a result of higher market volatility and increases in the client base
  • Operating expenses excluding variable remuneration up 22% to £79.1 million (H1 2020: £64.8 million) due to higher marketing costs to attract high-value new clients, increases in client trading-related variable costs, and investments in technology and platforms resulting in increased staff costs
  • Operating expenses including variable remuneration up 25% to £88.9 million (H1 2020: £71.2 million)
  • Profit before tax up 369%, demonstrating strong operating leverage
  • Regulatory total capital ratio of 27.3% and net available liquidity of £247.9 million
  • Interim dividend of 9.20 pence (H1 2020: 2.85 pence) with a total dividend for the year expected to be in line with policy at 50% of profit after tax

Significant investment in technology

  • The Group continues to win business in a highly competitive field through its investment in proprietary technology platforms, thereby diversifying its offering, enhancing its retail and institutional relationships, and enabling new revenue opportunities
  • The expertise and experience of the technology function has been further strengthened with Brendan Foxen, Chief Technology Officer, joining the Group during the period
  • In addition, the Group has significantly scaled up the breadth and capability of the technology function, hiring 68 additional staff (a 35% increase) since H1 2020, to increase the speed of delivery and volume of new platform and technology innovations and to capture new revenue opportunities

Peter Cruddas, Chief Executive Officer, commented:

“I am delighted with our record first half performance, which vindicates our strategy of continuing focus on high value clients. I am tremendously proud of the resilience, flexibility and capability displayed by all of my colleagues at CMC, and would like to personally thank them all for their commitment and passion with which they deliver the continued quality service to our clients.

At CMC our goal is to constantly provide a superior and unrivalled online trading experience for our clients and through this period of market uncertainty we have provided a CFD platform with 99.97% uptime. We look to lead with quality and in the period have been able to on-board a record number of high quality clients and deliver significant growth across all of our key businesses.

The significant increase in net trading revenue across all areas of the business in H1 2021 is a result of the Group’s unwavering focus on our strategic initiatives. This has delivered increased diversification of Group revenues, improved CFD client income and an increased number of active clients.

During the period we continued to recruit new staff, we did not request to participate in any Government financial support schemes and all staff were paid in full through the normal payroll. Our new Chief Technology Officer, Brendan Foxen, has settled in well and is already making a valuable contribution.

Looking ahead, while it is still too early to know the full extent of the changes in client trading demand, we have had the ability to demonstrate the strength of our offering and are confident in retaining the high-quality clients we target. I believe that CMC is in an excellent position. We have many opportunities to leverage our technological innovation, quality client service and platform strength, and these will allow us to expand our product portfolio and deliver further profitable growth for the Group. I believe that, based on these competitive advantages, we will be able to provide highly attractive returns for our shareholders over the coming years.”

Analyst and Investor Presentation

A presentation will be held for equity analysts and investors today, 19 November 2020, at 10:30 a.m. (GMT).

A live webcast of the presentation will be available via the following link:

https://webcasts.cmcmarkets.com/results/2021halfyear

Should you wish to ask a question, please dial into the presentation on +44 (0)20 3059 5869, and quote “CMC Markets plc H1 2021 Results Conference” when prompted.

Forthcoming announcement dates

20 January 2021 Q3 2021 trading update
8 April 2021 FY 2021 pre-close update

Forward looking statements

This trading update may include statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Group undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date such statements are published.

Enquiries
Euan Marshall, Chief Financial Officer
[email protected]
+44 (0) 20 3757 4980

Camarco
Geoffrey Pelham-Lane/Ed Gascoigne-Pees/Jennifer Renwick Tel: 020 3757 4980